Despite HELs rally, value remains

Even though the home equity and mortgage sectors of the securitization markets have experienced dramatic tightening since 3Q03, there is still room for appreciation in 2004, depending on where investors place their bets. In a pair of conference calls last week, researchers from Credit Suisse First Boston and UBS gave their respective opinions as to where value lies in the current market, and they shared surprisingly similar opinions.

Tom Zimmerman, home equity researcher at UBS, noted that unlike other sectors of the ABS market, home equity spreads have yet to reach the all-time tight levels seen throughout mid-2002. This, combined with the continued tiering experienced among issuers, leads to opportunities, Zimmerman added.

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